Academic Year 2026–2027 UNISA Assignment: FAC1502 Financial
Accounting Principles, Concepts and Procedures Fully Solved Assignment
with Verified Answers | Accounting Principles, Financial Accounting
Concepts, Accounting Procedures, Ledger Accounts, Financial
Statements, Double-Entry System and Accounting Cycle
,Question 1: What is the primary purpose of financial accounting?
A. To assist management in making internal business decisions
B. To provide financial information to external users for decision-making purposes
C. To ensure the business complies with all tax regulations
D. To calculate the profit or loss of the business for management only
CORRECT ANSWER: B. To provide financial information to external users for
decision-making purposes
Rationale: Financial accounting is primarily aimed at providing financial information
through statements for external users such as investors, creditors, and regulators who
are not involved in the day-to-day management of the entity .
Question 2: Which of the following represents the accounting equation?
A. Assets = Liabilities - Equity
B. Assets + Liabilities = Equity
C. Assets = Liabilities + Equity
D. Assets + Equity = Liabilities
CORRECT ANSWER: C. Assets = Liabilities + Equity
Rationale: The accounting equation is the foundation of double-entry bookkeeping and
states that assets are financed by either liabilities (external claims) or equity (owner's
claims) .
Question 3: Which financial statement provides a snapshot of a company's
financial position at a specific point in time?
A. Statement of Profit or Loss and Other Comprehensive Income
B. Statement of Cash Flows
C. Statement of Financial Position (Balance Sheet)
D. Statement of Changes in Equity
CORRECT ANSWER: C. Statement of Financial Position (Balance Sheet)
Rationale: The Statement of Financial Position, also known as the Balance Sheet,
presents a snapshot of an entity's assets, liabilities, and equity at a specific point in
time, illustrating its financial health .
Question 4: What is the common unit of measurement in accounting?
A. The quantity of goods produced
B. The number of transactions processed
C. Money
D. The number of employees
CORRECT ANSWER: C. Money
,Rationale: The common unit of measurement in accounting is money, which provides a
universal denominator for recording and communicating financial information .
Question 5: Which of the following is an example of a current asset?
A. Buildings
B. Equipment
C. Cash
D. Long-term investments
CORRECT ANSWER: C. Cash
Rationale: Cash is considered a current asset as it is readily available to meet short-
term obligations, typically within one year or the operating cycle .
Question 6: In a double-entry accounting system, every transaction affects:
A. Only one account
B. At least two accounts
C. Three accounts
D. No accounts, only the accounting equation changes
CORRECT ANSWER: B. At least two accounts
Rationale: In a double-entry accounting system, every transaction affects at least two
accounts to maintain the balance of the accounting equation, with debits equalling
credits .
Question 7: Depreciation is best described as:
A. The increase in an asset's value over time
B. The allocation of the cost of a tangible asset over its useful life
C. The total value of an asset at the end of its life
D. An expense that increases the value of an asset
CORRECT ANSWER: B. The allocation of the cost of a tangible asset over its useful
life
Rationale: Depreciation is the systematic allocation of the depreciable amount of a
tangible asset over its useful life, reflecting its usage and wear over time .
Question 8: Which inventory valuation method assumes that the first items
purchased are the first ones sold?
A. LIFO (Last In, First Out)
B. FIFO (First In, First Out)
C. Weighted average
D. Specific identification
CORRECT ANSWER: B. FIFO (First In, First Out)
, Rationale: FIFO (First In, First Out) assumes that the oldest inventory items are sold
first, meaning the cost of goods sold reflects the earliest purchase costs .
Question 9: What is working capital?
A. Total liabilities minus total assets
B. Current assets minus current liabilities
C. Total assets minus total liabilities
D. Current liabilities minus current assets
CORRECT ANSWER: B. Current assets minus current liabilities
Rationale: Working capital is calculated as current assets minus current liabilities,
indicating the liquidity available to meet short-term obligations and fund day-to-day
operations .
Question 10: Which of the following is considered a long-term liability?
A. Accounts payable
B. Notes payable due in 90 days
C. Bonds payable
D. Accrued expenses
CORRECT ANSWER: C. Bonds payable
Rationale: Bonds payable are a long-term liability as they are typically due beyond one
year, representing a long-term obligation for the entity .
Question 11: VAT Input account normally has a:
A. Credit balance
B. Debit balance
C. Zero balance
D. Contra balance
CORRECT ANSWER: B. Debit balance
Rationale: VAT Input (paid on purchases) represents VAT that the business can claim
back from SARS, and it normally carries a debit balance which is offset against VAT
Output .
Question 12: A business purchases inventory on credit for R10,000 plus 15% VAT.
What is the double entry?
A. Dr Purchases 10,000, Dr VAT Input 1,500, Cr Trade Payables 11,500
B. Dr Purchases 11,500, Cr Trade Payables 11,500
C. Dr Inventory 11,500, Cr Trade Payables 11,500
D. Dr Trade Payables 11,500, Cr Purchases 10,000, Cr VAT Output 1,500
CORRECT ANSWER: A. Dr Purchases 10,000, Dr VAT Input 1,500, Cr Trade Payables
11,500
Accounting Principles, Concepts and Procedures Fully Solved Assignment
with Verified Answers | Accounting Principles, Financial Accounting
Concepts, Accounting Procedures, Ledger Accounts, Financial
Statements, Double-Entry System and Accounting Cycle
,Question 1: What is the primary purpose of financial accounting?
A. To assist management in making internal business decisions
B. To provide financial information to external users for decision-making purposes
C. To ensure the business complies with all tax regulations
D. To calculate the profit or loss of the business for management only
CORRECT ANSWER: B. To provide financial information to external users for
decision-making purposes
Rationale: Financial accounting is primarily aimed at providing financial information
through statements for external users such as investors, creditors, and regulators who
are not involved in the day-to-day management of the entity .
Question 2: Which of the following represents the accounting equation?
A. Assets = Liabilities - Equity
B. Assets + Liabilities = Equity
C. Assets = Liabilities + Equity
D. Assets + Equity = Liabilities
CORRECT ANSWER: C. Assets = Liabilities + Equity
Rationale: The accounting equation is the foundation of double-entry bookkeeping and
states that assets are financed by either liabilities (external claims) or equity (owner's
claims) .
Question 3: Which financial statement provides a snapshot of a company's
financial position at a specific point in time?
A. Statement of Profit or Loss and Other Comprehensive Income
B. Statement of Cash Flows
C. Statement of Financial Position (Balance Sheet)
D. Statement of Changes in Equity
CORRECT ANSWER: C. Statement of Financial Position (Balance Sheet)
Rationale: The Statement of Financial Position, also known as the Balance Sheet,
presents a snapshot of an entity's assets, liabilities, and equity at a specific point in
time, illustrating its financial health .
Question 4: What is the common unit of measurement in accounting?
A. The quantity of goods produced
B. The number of transactions processed
C. Money
D. The number of employees
CORRECT ANSWER: C. Money
,Rationale: The common unit of measurement in accounting is money, which provides a
universal denominator for recording and communicating financial information .
Question 5: Which of the following is an example of a current asset?
A. Buildings
B. Equipment
C. Cash
D. Long-term investments
CORRECT ANSWER: C. Cash
Rationale: Cash is considered a current asset as it is readily available to meet short-
term obligations, typically within one year or the operating cycle .
Question 6: In a double-entry accounting system, every transaction affects:
A. Only one account
B. At least two accounts
C. Three accounts
D. No accounts, only the accounting equation changes
CORRECT ANSWER: B. At least two accounts
Rationale: In a double-entry accounting system, every transaction affects at least two
accounts to maintain the balance of the accounting equation, with debits equalling
credits .
Question 7: Depreciation is best described as:
A. The increase in an asset's value over time
B. The allocation of the cost of a tangible asset over its useful life
C. The total value of an asset at the end of its life
D. An expense that increases the value of an asset
CORRECT ANSWER: B. The allocation of the cost of a tangible asset over its useful
life
Rationale: Depreciation is the systematic allocation of the depreciable amount of a
tangible asset over its useful life, reflecting its usage and wear over time .
Question 8: Which inventory valuation method assumes that the first items
purchased are the first ones sold?
A. LIFO (Last In, First Out)
B. FIFO (First In, First Out)
C. Weighted average
D. Specific identification
CORRECT ANSWER: B. FIFO (First In, First Out)
, Rationale: FIFO (First In, First Out) assumes that the oldest inventory items are sold
first, meaning the cost of goods sold reflects the earliest purchase costs .
Question 9: What is working capital?
A. Total liabilities minus total assets
B. Current assets minus current liabilities
C. Total assets minus total liabilities
D. Current liabilities minus current assets
CORRECT ANSWER: B. Current assets minus current liabilities
Rationale: Working capital is calculated as current assets minus current liabilities,
indicating the liquidity available to meet short-term obligations and fund day-to-day
operations .
Question 10: Which of the following is considered a long-term liability?
A. Accounts payable
B. Notes payable due in 90 days
C. Bonds payable
D. Accrued expenses
CORRECT ANSWER: C. Bonds payable
Rationale: Bonds payable are a long-term liability as they are typically due beyond one
year, representing a long-term obligation for the entity .
Question 11: VAT Input account normally has a:
A. Credit balance
B. Debit balance
C. Zero balance
D. Contra balance
CORRECT ANSWER: B. Debit balance
Rationale: VAT Input (paid on purchases) represents VAT that the business can claim
back from SARS, and it normally carries a debit balance which is offset against VAT
Output .
Question 12: A business purchases inventory on credit for R10,000 plus 15% VAT.
What is the double entry?
A. Dr Purchases 10,000, Dr VAT Input 1,500, Cr Trade Payables 11,500
B. Dr Purchases 11,500, Cr Trade Payables 11,500
C. Dr Inventory 11,500, Cr Trade Payables 11,500
D. Dr Trade Payables 11,500, Cr Purchases 10,000, Cr VAT Output 1,500
CORRECT ANSWER: A. Dr Purchases 10,000, Dr VAT Input 1,500, Cr Trade Payables
11,500
